Bank 'optimistic' despite loss

The bank said there is room for 'cautious optimism'

Northern Bank has reported a loss of £7.5m for the third quarter of 2009.

The bank made an operating profit of £15.5m, but had to set aside £23m to cover loans it thinks might not be repaid.

Actual write-offs for the year to date are much lower at £5.3m

Chief executive Gerry Mallon said there was room for "cautious optimism" as the provision for potential losses has reduced in this quarter.

The bank said its total lending grew by 1%, including mortgage growth of 11% year on year.

Total income for the third quarter of 2009 was £51.7m.

Mr Mallon said that with the economy still in recession conditions remain "challenging" for consumers and for businesses.

'Encouraging'

The crash in property values is still a drag on the bank with a large amount of the potential loan losses concentrated in that sector.

University of Ulster economist Mike Smyth said the bank's results are part of a pattern suggesting tentative economic recovery.

"Their underlying profit performance is really quite encouraging and does fit with the wider emerging evidence that, slowly, our economy is starting to turn the corner.

"But next year could be very bad - we don't know how the Nama issue will play out and there could be casualties north of the border. I'm sure all banks in Northern Ireland are very, very nervous."

Northern Bank began in 1809 as a Belfast-based banking company known as the Northern Banking Partnership.

It was acquired by the Danske Bank Group in 2005, the largest bank in Denmark and a major player in Scandinavian financial markets.

It has 83 branches in Northern Ireland employing around 1800 people.

Danske's operation in the Republic of Ireland, National Irish Bank, reported pre-tax losses of 496m euros for the nine months to the end of September as the bank said it was setting aside 544m euros for loans it thinks might not be repaid.

The bank's chief executive Andrew Healy said that the results are in line with expectations against the background of extremely difficult economic and market conditions.